New twist on Web gambling generates controversy

Alan Sayre

Tuesday, Feb. 29, 2000 | 10:57 a.m.

NEW ORLEANS -- A company that wants to telecast casino table games from Monroe to players on the Internet is disputing a state attorney general's opinion that could bar the firm from Louisiana.

Mardi Gras Holding Group Inc. wants to build a television studio where casino-type games with live dealers would be produced and transmitted by satellite to Antigua, where they would be put on the Internet.

Wagers would not be taken from states and countries where Internet gambling is illegal -- including Louisiana, the company says.

In an opinion issued Feb. 11 to Ouachita Parish District Attorney Jerry Jones, Attorney General Richard Ieyoub said the operation would violate the state's ban on Internet wagering, passed by the Legislature is 1997.

In a letter to Ieyoub released to the media, the company questions the opinion, which does not carry the force of law, but is usually a standard unless overturned by a court.

"The business is no different than a film or television production facility where employees (or actors, if you will) perform their jobs for a television camera. The signal is then transmitted via satellite to a legally licensed Antigua company just as any Louisiana TV station would transmit news to a major network or CNN," the letter said.

Basically, the company contends that since no wagering would be allowed from Louisiana points, it would not be in violation of the state's anti-Internet gambling law.

But Ieyoub said the law goes beyond actual wagering by consumers and covers anyone who handles any product that is used in Internet wagering, such as the service designed by Mardi Gras Holding Group. Violation of that provision of the law carries up to five years in prison and a fine of up to $20,000, Ieyoub said.

Ieyoub's opinion also says the state has the right "to protect its citizens, and particular its youngest citizens, from the pervasive nature of gambling which can occur via the Internet."

However, the company said that Ieyoub's position on that issue collided with the U.S. Constitution and pointed out that a 1996 federal law that would have restricted certain Internet activities was thrown out by the U.S. Supreme Court.

Mardi Gras Holding Group describes itself as consisting of a dozen businessmen from Louisiana, Texas, Mississippi, Tennessee, Georgia and California. The company said it chose Monroe because it contains a federal empowerment zone, a program designed to lure businesses through tax breaks to poorer neighborhoods.

Bob Vernon, the company's managing director, said representatives met last year with the attorney general's gaming division before attracting investors and were led to believe their plan was legal.

"Absolutely no wager would be put on any activity in the U.S.," Vernon said.

Vernon said a player cannot be sure of the odds on virtual reality software used by other Internet casino sites and his company would provide the same chance at winning as an actual casino.

The company plans to hire 200 employees initially in the Monroe area and eventually expand to 500, he said. Vernon said he hoped to meet with Ieyoub in the near future to discuss the company's plan and had no immediate plans to sue.

Congress is now wrangling with Internet betting.

Federal law prohibits the use of the Internet for sports betting. A bill that passed the Senate last year also would make it illegal to bet on casino-style games online. A companion bill is pending in the House and is the subject of a subcommittee hearing scheduled for March 9.

Vernon said he is trying to have his company's plan presented to Congress as an alternative to a ban. "We believe we're the solution and not the problem," he said.

The company, which has hired a former FBI agent as its operations director, said it would limit the amount of money a player could lose and would not allow the use of credit cards and ATM cards to wager.

The number of online casinos has mushroomed from 15 in 1996 to more than 700 today, according to industry research. Revenue to the roughly 200 companies that operate those sites is estimated to reach nearly $1.5 billion this year and $3 billion by 2002, said Sebastian Sinclair, an analyst who performs market research for the online gambling industry.